In what could be a small sign that a cross-licensing (and potentially damages) settlement agreement could be at hand in the legal war [1][2][3][4] [5][6][7] between Samsung Electronics Comp., Ltd. (SEO 005930) and Apple, Inc. (AAPL), Apple revealed that is former chief executive had sought out Samsung to discuss a deal, before he initiated the legal war by filing a civil suit against Samsung in Northern California District Court.

I. Did Steve Jobs Try to Cut a Deal with Samsung?

The revelation came, according to international news service Bloomberg, in testimony by Richard Lutton, a senior director at Apple and the company's patent attorney, during a hearing in Australian court. Apple is seeking to ban sales of Samsung's popular Galaxy 10.1 tablet in Australia, until a final trial decision is handed down in its Australian federal lawsuit against Samsung.

Samsung has agreed to temporarily delay the release of the tablet in Australia, allowing for the Australian judge to decide whether or not to agree to Apple's request of issuing a preliminary injunction banning Samsung's tablet sales. The decision was supposed to occur this week.

In testimony, Mr. Lutton painted Apple as the victim, rather than the aggressor in the patent war. He claims that Apple co-founder and chief executive Steven P. Jobs approached Samsung in July 2010 to try to negotiate with the company. It is unclear what exactly Apple suggested. One possibility is that it asked Samsung to stay out of the tablet market -- which would be very unfavorable for Samsung to agree to. Alternatively, it could have wanted payment for a cross-licensing deal, similar to the deal Samsung recently inked with Microsoft Corp. (MSFT).

Steven P. Jobs [Source: AP Photo]

Whatever Mr. Jobs' proposal was, Samsung decided it to be too adversive. Negotiations between the firms, which Mr. Lutton says did not involve Mr. Jobs (who is facing a health crisis) fell apart shortly thereafter. Samsung would go on to launch its first tablet -- the Galaxy Tab (7-inch) in September. The rest, as they say, is history and Samsung and Apple reached their current state of suing each other in at least 23 federal courts or trade agencies in at least 10 countries.

Mr. Lutton did have some kind words for Samsung commenting, "Samsung is an important supplier with whom we have a deep relationship."

Bloomberg says its research data indicates that Samsung is Apple's second largest supplier and that Apple is Samsung's largest electronics component client.

II. Samsung Proposes a Truce

In related news, Samsung's legal chief David Catterns has reportedly proposed a cross-licensing agreement in Australia, which would put the companies' legal conflict behind them -- in one country at least. The news was first reported by Bloomberg.

The news came shortly after Apple dropped two of patents from the case, patents that it initially planned to pursue infringement claims on. During the initial filing of the case Apple had claimed Samsung infringed on ten of its patents, then in a later filing it broadened that to a whopping thirteen patents. But in later court filings, its lead barrister Stephen Burley reduced the number Apple intended to enforce to five.

In other words Apple may still contend Samsung violates those other patents, it's just not expending resources trying to sue to assert them in court. This is probably because it thinks they're comprised of weaker claims, which risk being invalidated in court.

Now that number has been cut again. Apple excluded for unknown reason its patent on touch screen unlocking via a swipe gesture (patent AU 2008100011). And it also excluded its patent on a bouncing animation when zooming in on a document or icon (patent AU 2009208103, as Samsung agreed to remove this feature from its Australian tablets.

Now only three touch-related patents -- a patent on the manufacturing of a capacitive touch screen used in the iPad 2 and Galaxy Tab 10.1 (patent AU 2005246219), a patent covering selective rejection of inadvertent finger movements on a touch screen (patent AU 2008258177), and a heuristics patent used to correct a user's finger movements when scrolling vertically on a screen (patent AU 2007286532).

Apple has reduced its claims against Samsung from 13 to 3. [Source: Android Community]

Apparently Samsung wants to cross-license those patents. In exchange it will drop its claims agaisnt Apple regarding various wireless patents it owns, which it says Apple's i-devices violate. The terms of the cross-licensing proposal have not been revealed, so it's unclear whether Samsung would be seeking any additional payments from Apple, or vice-versa as part of the arrangement.

Apple lawyer Steven Burley reportedly said in court that his company would consider the proposal. Apple will have a bit of time to think it over. The sides failed to conclude their arguments on time today so the Judge did not rule on whether a preliminary injunction would be issued. The hearing is set to resume on Oct. 4, after a public holiday in New South Wales.

Federal Court Justice Annabelle Bennett commented, "I can't promise when I’ll make a decision. I will try to get it out as soon as possible."

A cross-licensing agreement could be a signal of the beginning of an international peacemaking process between Samsung and Apple. That could allow Apple to retain Samsung as its primary supplier of low-cost, high-quality NAND flash storage. In recent reports Apple was rumored to be considering a switch to other suppliers, but was expected to take a price, and possibly quality, hit if it did so.